National Credit Regulator Presentation by: Acting Chief Executive Officer: Ms Nomsa Motshegare
About The N C R NATIONAL CREDIT REGULATOR
Presentation Overview Who is the NCR Objective of the NCA Consumer Credit Market in South Africa Debt Counselling Blitzkrieg Campaign Consumer Education
Who is the NCR Parliament of SA NCR, Est. By Act of Parliament: NCA,34 of 2005 Department of Trade & Industry Board of Directors Departments of Finance, Housing & Social Development CEO 100< staff members Registrations Complaints & Call Centre Investigations & Enforcement Consumer awareness & education Credit Bureau & Research Statistics & Research Debt Counselling monitoring &support Support Services: IT, HR & Finance
The Objectives of the NCR The purpose of the Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient and accessible credit market and industry, and to protect consumers
Consumer Credit Market in South Africa Credit Providers 18.4 million Credit Active Consumers R1.2 trillion consumer credit consumer credit -35 million outstanding accounts Credit Providers = 4,755 Branches = 36,000 2,027 Debt Counsellors Credit Bureaus = 11
Credit Bureau Statistics Debt stress & defaults Credit performance of 18.8 million consumers, as reported by credit providers to bureaus. Covers both credit agreements and all other forms of debt or financial obligations Ongoing increase in consumers with impaired records, from 36% in Jun 07 to 47% in Jun 11. The number of consumers with impaired records increased by 2.7 million since June 2007. Credit-active consumers have increased from 16.8 million in June 2007 to 18.8 million in June 2011.
Credit standing of consumers Credit standing of consumers June 2011 The percentage of consumers with impaired records increased to 46.7%, comprising 18.5% of consumers with three months or more in arrears, 13.9% of consumers with adverse listings and 14.3% of consumers with judgments and administration orders. 8
Credit reports issued Credit reports issued to consumers have increased by 35 000 since December 2007. More consumer education still needs to be done to encourage consumers to request their credit reports. 9
Credit granted vs. Debtor s book -The value of credit granted was R85.08 billion for the quarter ended June 2011 -The value of total outstanding gross debtors book is R1.2 trillion 10
11 New credit granted percentage distribution
12 Performance of the debtors book that is in current based on the rand values
Debt Counselling Role of debt counselling in assisting consumers to deal with the impact of an economic down-turn and debt-stress Problems which are preventing effective implementation
DEBT STRESS Consumer credit impact all areas of economic life = purchase of houses, cars, appliances etc Contraction in credit, huge impact: drop in demand; drop in production; losses in job & commissions property prices Feed through into debt stress more houses on market, 2nd round of fall-out, with huge impact on financial system & society Debt counselling designed to mediate this process to create a safety valve, a mechanism to resolve all cases possible of resolution 14
Millions Debt Counselling current position 00000 Client Applications R 300.00 Monthly Distribution to Creditors 50000 00000 50000 00000 50000 R 250.00 R 200.00 R 150.00 R 100.00 R 50.00 0 R 0.00 2027 debt counsellors registered, five accredited payment distribution agencies. NCR - extensive monitoring + support mechanisms + investigations & enforcement 276,601 + applications cumulatively, growing at 6,000 pm; Monthly distributions to creditors now approx R235 million for approximately 65 000 consumers. Cumulative R5.4 billion to CPs. 90% of payment received by banks come from accredited PDAs. Despite challenges, debt counselling already played a huge role in mediating between debt stressed consumers and their credit providers but challenges remain. 15
Blitzkrieg Campaigns The abovementioned project was executed in Eastern Cape in conjunction with the following government stakeholders; o National Credit Regulator (NCR) o National Prosecuting Authority (NPA) o Eastern Cape Commercial Crimes Unit (ECCCU) o South African Police Services (SAPS) o South African Social Security Agency (SASSA)
Blitzkrieg Campaign The last campaign in October 2011 conducted in 4 surrounding townships of the City of Port Elizabeth. The purpose of the campaign was to investigate operations of unscrupulous credit providers. A number of Skoppers were arrested. Police also found the suspects in possession of pension cards, ID books and bank cards.
18 RECENT RAIDS IN E/CAPE
Consumer education Summary of Act & short brochures on different aspects in all official languages & available on www.ncr.org.za
Consumer Education Since its inception the NCR has consistently made a concerted effort to educate and inform the South African public about the NCA and the NCR s role and responsibilities as per its mandate from the Act. We fund all our education programmes. We also partner with all the 9 Provincial Consumer Affairs Offices.
Consumer Education The Education programmes are targeted at all South African consumers through: o Consumer Advice Centers; o Labour Unions, o Non-Governmental Organisations (NGOs); o Government Departments/Institutions; o Provincial Consumer Protection Offices; o Employers/Private sectors o Traditional Authorities and o Other civic bodies.
Consumer Education Communication Tools: o Seminars for professional bodies; o Capacity Building Workshops o Consumer Education Workshops o Road shows o Exhibitions
Consumer Education o Resources File ( Presentations; Material on financial literacy; Broachers; Consumer Booklet; Radio Script; NCA & Regulations ) o Consumer Booklet o NCR Website o Billboard o Print Media (Editorial and advertisements), broadcast (interviews with NCR s spokespersons) and electronic media editorials.
Consumer Education Communication Campaigns: o Spend and Borrow Wisely (November/December) o Consumer Month (15 March: International Consumer Rights Day) o Youth Month (16 June) o Women s Month (09 August) o Worker s Month (1 May)
Consumer Education South African Savings Institute joint campaigns with the NCR: Targeted students in all South African tertiary institutions campuses. The aim of the campaign is to create awareness amongst tertiary students on their rights and responsibilities when taking up credit, debt management and the importance of saving.
Consumer Education BASA Campaign with NCR: o In an unprecedented move to deal effectively with consumer debt related challenges, the Banking Association of South Africa (BASA), the National Credit Regulator (NCR), and the Debt Counselling Association of South Africa (DCASA) launched a joint national consumer awareness campaign in 2010.
Consumer Education o The joint campaign by key stakeholders in South Africa s banking and credit regulatory environments was a first for the industry and aimed at addressing adverse consumer behaviour trends as well as promote a better understanding of debt counselling, including expected conduct by consumers o The campaign, was funded by SA leading banks; ABSA, African Bank, Capitec, First Rand, Nedbank and Standard Bank conveyed key messages through a national advertising and publicity campaign, with very specific calls to action:
Consumer Education Financially distressed consumers: o Not yet in default or debt counselling: o Already in default but not in debt counselling o Already in debt counselling and paying something to their creditors. o Already in debt counselling and not paying anything to their creditors.
Consumer Education Since inception - end of September 2011 o Number of workshops 2 057 Audited Numbers) o Number of participants 241 580 (Audited Numbers) o Hits on website 979 795 o Total Advertising Value Equivalence (AVE) - R393 million
Disabled Community Programme The Governments Social Grant System also caters for people with disabilities who are unemployed. This also makes them potential victims to unscrupulous micro lenders that are targeted by the Blitzkrieg. Those who are economically active also find themselves marginalized from some of the education programmes that we undertake Therefore the NCR has in the past made efforts to develop special educational programmes that were tailor-made for hard at hearing (deaf) and blind people.
Disabled Community Programme Train the Trainer Programme: The rationale was for trained participants to train their respective constituencies on the NCA and role of the NCR Blind Programme: o National Council for the Blind (NCB) was engaged in mobilizing participants from all nine provinces of South Africa. o NCA Consumer Booklet was translated into the brail language.
Disabled Community Programme Hard at Hearing (Deaf) Programme: o The Deaf Federation of South Africa mobilised participants in all 9 provinces of South African. o Professional sign language interpreters were secured to assist NCR consumer education officers during the workshops.
Consumer Education Soul City Television Series: The NCR will for the first time explore new communication channels through the above mentioned television series. It is anticipated that by partnering with an edu-entertainment like Soul City will derive the following benefits: o The series as one of the most watched television programmes ( more than 50% of the total TV viewers watch Soul City) in the country will role-model action that will educate and assist viewers about their rights and responsibilities as consumers when it comes to credit matters and also will highlight the roles and responsibilities of the NCR within the credit market and simultaneously educate the viewers about the NCA.
Consumer Education How do we evaluate Education Initiatives/Programme? o Workshop Evaluation Questionnaire for Capacity Building Workshops Evaluation Sheets are issued at the end of the workshop to measure effectiveness of the content and presenters. o Through the call center we are also able to determine the effectiveness of our communication strategies by asking the calling public how they got to know about the NCR for example, Electronic: Print Media, word of mouth or attended an NCR run workshop.
Consumer Education Impact Assessment: o Since 2008, the NCR has commissioned an impact assessment study on an annual basis to evaluate the effectiveness of Awareness and Education Campaigns and performance of the implementation of the NCA. The 2010 major findings were: The NCA and NCR s awareness levels are at 70% (54%:2008)and 73% (51%:2008) respectively. Awareness levels among low-income group remains relatively low. There is limited understanding of credit terminology. There is limited awareness of consumer protection avenues, including debt counselling. NCR staff are perceived as being helpful and responsive. Media: Effective in use of media in increasing public awareness
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